Apple blames revenue slump on slowing Chinese economy as iPhone sales slow

Apple has revealed its takings are expected to be much lower than predicted during the crucial run up to Christmas, as demand for iPhones wanes.

CEO Tim Cook blamed the slump on a slowing economy in China, where Apple has also faced competition from Huawei and Xiaomi.

Mr Cook also acknowledged that demand for the latest iPhone is down.

The company now expects revenue of around $84 billion (£67bn) for the October to December period, well below previous predictions of up to $91bn (£72bn).

Shares in Apples plunged seven per cent on Wednesday following the announcement.

The official revenue results are due to be released on January 29.

President Donald Trump has raised new tensions between the US and China by imposing tariffs on more than $200bn (£159bn) in goods

Although the iPhone has not been affected directly by the tariffs, Mr Cook said it had put a strain on the Chinese economy.

China's "economy began to slow there for the second half," Mr Cook said during an interview with CNBC on Wednesday afternoon. "The trade tensions between the United States and China put additional pressure on their economy."

Wedbush Securities analyst Daniel Ives described it as "Apple's darkest day during the Cook era", saying: "No one expected China to just fall off a cliff like this."

While President Trump's trade war with China isn't helping Apple and other US technology companies, Mr Ives believes Apple miscalculated by continuing to roll out high-priced phones in China, creating an opening for rivals with less costly alternatives that still worked well.

Apple's top-of-the-line iPhones have a starting price of $1,000 (£800).

The price gap is one reason Huawei surpassed Apple in smartphone sales from April through September last year to seize the number two spot behind industry leader Samsung, according to the research firm International Data Corp.

"The question now is will Apple change its strategy or stick to its hubris," Ives said.

To help boost iPhone sales, Mr Cook said Apple will expand its financing plans and build upon its recent efforts to make it easier to trade in older models at its stores.

US stocks went into a steep slide after Apple reported a slowdown in iPhone sales in China, a hugely important market for the company.

The rare warning from Apple sent a shudder through markets and confirmed fears among investors that the world's second-largest economy was weakening.

The Dow Jones Industrial Average fell more than 600 points about an hour into trading.

Apple's stock plunged 10%, erasing 67 billion dollars (£53 billion) in value.

Other big exporters including technology and machinery companies also took big losses.

Some of the worst drops were at chipmakers that make components used in smartphones and other gadgets.

The US-China trade dispute, nearly a year old, threatens to hit their supply lines and reduce demand for their products.

Tariffs and other trade sanctions could add to their difficulties.